The Court of Appeals decision in this case sets out the standard of review used by courts when considering appeals from administrative decisions made without first holding a hearing.

A fire lieutenant [Lieutenant] with the City of Long Beach Fire Department applied for accidental disability retirement benefits pursuant to Retirement and Social Security Law [RSSL] §363-c. The State Comptroller granted Lieutenant’s application.

Lieutenant than sought supplemental disability retirement benefits from the City pursuant to General Municipal Law §207-a.

GML §207-a provides that an individual subject to its provisions receiving a retirement allowance as the result of disability incurred in performance of duty pursuant to §363-c of the RSSL, or similar accidental disability pension provided by the retirement system of which he or she is a member, “shall continue to receive from the municipality or fire district by which he [or she] is employed, until such time as he [or she] shall have attained the mandatory service retirement age applicable to him [or her] or shall have attained the age or performed the period of service specified by applicable law for the termination of his [or her] service, the difference between the amounts received under such allowance or pension and the amount of his [or her] regular salary or wages.”*

The Fire Commissioner denied Lieutenant’s request for a GML §207-a supplement without explanation, which determination was subsequently sustained by the City's Corporation Counsel. Lieutenant then filed an Article 78 proceeding challenging the City of Long Beach's decision.

The Court of Appeals agreed with the Appellate Division’s ruling, explaining that in reviewing the City's determination, which was made without a hearing, the issue is whether the action taken by the administrative agency had a "rational basis" and was not "arbitrary and capricious." An action is arbitrary and capricious, said the court, if it is taken “without sound basis in reason or regard to the facts." In contrast, noted the court, if the administrative determination has a rational basis, it will be sustained, even if a different result would not be unreasonable.

According to the Court of Appeals’ decision the City's denial of the GML §207-a supplement was based on statements made by Lieutenant's estranged wife in the midst of a divorce and the Corporation Counsel's personal observations of Lieutenant.

As Lieutenant not given any notice of the allegations nor an opportunity to respond to them,** despite the substantial contrary record evidence, including medical findings, that led to the approval of Lieutenant's application for disability benefits by the State Employees’ Retirement System, the Court of Appeals said that it agreed with the Appellate Division’s conclusion that the City's justification for its denial of payment of the benefits to be provided in accordance with GML §207-a “lacks the requisite rational basis and was, therefore, arbitrary and capricious.”

* N.B. This supplementation of a disability retirement benefit is unique to individuals within the ambit of GML §207-a. GML §207-c, which is applicable to law enforcement personnel disabled in the line of duty and who are subsequently granted an accidental disability or similar retirement benefit are not eligible to received a GML §207-a type “supplementation” to their disability related retirement allowance pursuant to GML §207-c except in certain situations such as the one considered by the court in Matter of the Arbitration between the City of Plattsburgh and Plattsburgh Police Officers, 250 AD2d 327.

** Although as a general rule the payment of the supplement authorized by GML §207-a is a function of the individual's receiving a disability retirement allowance, GML §207-a.6 provides for the forfeiture of the supplement under certain conditions. In view of this decision, prudence suggests that such forfeiture of the supplement pursuant to GML §207-a.6 should be effected only after notice and hearing.